The business behind the show

Redbox ends feud with Warner Bros., agrees to delay new DVD releases

February 16, 2010 | 1:39
pm

Redbox has lost its fight with Hollywood.

In a major concession, $1-per-night-DVD kiosk company Redbox Automated Retail has signed a deal with Warner Bros. agreeing not to offer the studio's newly released DVDs until 28 days after they go on sale.

In August, Warner became the the third major studio, along with Universal Pictures and 20th Century Fox, to demand that Redbox agree to a sales-only "window" and not offer their films for several weeks after they debut on DVD. All three studios argued that low-cost rentals were undermining more profitable DVD sales, driving an overall decline in home entertainment revenue.

Redbox sued the three studios, alleging that they didn't have the right to order distributors not to provide their movies for its kiosks. It has dropped its suit against Warner Bros.

Redbox's reversal is a major blow to the company, which had argued that providing its customers with movies the same day they go on sale was critical to its fast-growing business.

While the lawsuits worked their way through court, Redbox has attempted
to stock its kiosks with Warner, Fox and Universal movies by purchasing
them from retailers like Wal-Mart, a strategy that has met with mixed
results and often left its kiosks short on supplies.

The new deal with Warner Bros. could soon be copied by Fox and Universal. Other studios that signed deals guaranteeing availability of their movies the same day they go on sale, including Sony Pictures, Paramount Pictures and Lions Gate Entertainment, may have clauses in their contracts allowing them to impose a window as well, people familiar with the deals said.

The Redbox deal comes a month after Warner struck a similar deal with Netflix and is a major step toward a transformed home entertainment market in which consumers can't rent movies anywhere until several weeks after they go on sale.

In a statement, Redbox President Mitch Lowe said the deal will allow his company to offer greater availability of Warner Bros. movies at reduced cost.